Congress has recently issued Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act with significant legislation affecting payroll. The FFCRA offers payroll tax credits for certain sick pay and extended family and medical leave. The CARES Act offers a Small Business Paycheck Protection Program with loan forgiveness provisions, Employee Retention Credits, and the delay of employer payroll taxes. An employer will not qualify for all of these provisions.
Each program or provision will have their own specific qualifications. Even if an employer should qualify under more than one, the ability to claim a credit or relief provision is impacted by the others.
If an employer receives a Small Business Interruption Loan under the Paycheck Protection Program that employer is not eligible for the Employee Retention Credit. If an employer has indebtedness forgiven under the Paycheck Protection Program, they do not qualify to elect to delay employer payroll taxes.
While an eligible employer may receive both a FFCRA tax credit for paid sick pay and extended family and medical leave and an Employee Retention Credit, wages for the Employee Retention Credit do not include wages for which the employer received a tax credit for FFCRA or a work opportunity tax credit. Similarly, an eligible employer may receive both a FFCRA tax credit and a Small Business Paycheck Protection Program loan, but the wages used for a FFCRA tax credit are not eligible payroll costs for purposes of receiving loan forgiveness under the CARES Act.
Your payroll department or outside payroll processing company will not necessarily know which programs are most beneficial to you. It is important that you communicate with them which provisions to apply.
Please contact your Vrakas representative if you have questions on the specific program qualifications.